Earnings call transcript Q2 2023

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Operator

Good day ladies and gentlemen, and welcome to Dynavax Technologies' Second Quarter 2023 Financial Results.

As a reminder, this conference is being recorded. At the end of the company's prepared remarks, we will open the call for questions and provide specific instructions at that point.

I would now like to turn the call over to Paul Cox, Vice President, Investor Relations and Corporate Communications.

You may begin.

Paul Cox

participating call. for all you in today's Thanks

Officer. Joining Executive Officer; Officer; from Dynavax Chief Rob Spencer, Chief are Ryan Financial MacDonald, Donn Kelly Chief Officer; me Medical today Janssen, and Casale, Chief Commercial

ended Earlier today Dynavax presentation and XXXX. financial results are release available of press supplementary website. June second the for Copies a XX, the released quarter slide on Dynavax's

not today and you market Before we rates will of efforts, but statements including I beliefs, flow, impacts starts forward-looking recommendation current expectations current may advise guidance trial marketing involve that sufficiency differ related each, materially. XXXX potential to, and and and our sizes, data based begin, cash share market profitability, uncertainties our readouts statements financial These we results making revenue, on CpG uses effective growth risks for potential trends market our submissions, and limited demand FDA and of including be on and ACIP and adjuvant. segmentation, related expected or critical and and results future of capitalization, timing actual future

including These quarterly XX-Q. press summarized in filings, detailed on and the report factors are section our SEC release risk Form of risks in today's today's

today, Our such no statements. looking and speak forward as obligation statements of undertake we to update

with I'll the now call turn over And that, to Ryan.

Ryan Spencer

of to Thanks, Paul. quarter Good to us join time Dynavax's for and read for thank the afternoon, second XXXX. everyone taking results the you

the capturing net B the to These of outstanding hepatitis delivered hepatitis reflect vaccine pleased which product share of B another share. including adult quarterly in adult market team's progress million success results are We our Dynavax, results revenue. in and driving our $XX quarter HEPLISAV-B, market expansion yet impressive the for for vaccine,

range significantly HEPLISAV-B product along result of are be enthusiasm to the our the of revenue range, expect $XXX now the growth expect $XXX now growing year. this XXXX. revenue million, $XXX for with the we increased to XXXX, first million. performance million compared year, a of net $XXX to million HEPLISAV-B XX% market, to see XX% the our of we the year. to with the we full raising revenue compared We in in Last that As And guidance half prior range expectations in HEPLISAV-B strong of to doubled

we to investments Based opportunity million and portfolio. increasing on This while commercial investments to at expect our for HEPLISAV-B our making total. in end. our us we cash flow exceptional maximize And strengthened position, the execution, advance to financial addition $XXX with free enables our the efforts quarter appropriate cash XXXX support clinical positive have to

in of We program in advancing vaccine few make clinical pipeline clinical and Plague. Tdap, progress take expectations will achievements for continue Shingles three our -- walk for our and our through to candidates minutes. Rob a

updates expertise capital in we synergy capabilities; value remain commercial identify significant providing and review would look in assets generate the include efforts diversify outside assets of forward or product help modalities to to to and We're leverage continue the growth. the and infectious high future the in to two portfolio in this commercial future. growth opportunities space and focusing strategic integrated our opportunities our to on to on and our late opportunities. vaccines. vaccine fully prioritizing we broaden second, disease focus external space accelerate front focused our that on first, therapeutic disciplined the stage Additionally, accelerate our and strategy And within We categories: our following field and allocation further commercial

in the the provide can tremendous performance turn Donn, I'll to over more HEPLISAV-B call now on the quarter. he second so details

Donn Casale

well progress in as Ryan. very capturing quarterly and vaccine. growth, as strong I'm another performance hepatitis believe best-in-class within our overall to for B about HEPLISAV-B share details is you, excited market what continued we Thank market more the share driving

The market We for in hepatitis believe hepatitis and catalyst will universal be growth the this grow grow market recommendation represents B U.S B the opportunity. by $XXX recommendation U.S vaccination, and ACIPs in a million following continues XXXX. a to large significant market the could hepatitis estimate growing to for over B which the opportunity now

hepatitis We a growth continues HEPLISAV-B towards B continue vaccine XX% majority to the with hepatitis market market trend approximately in see indicators share of positive securing QX. B market expansion its within of year-over-year expanding market.

end last gains share to quarter and share estimate in compared total XX% HEPLISAV-B's approximately market increased of the that demonstrating are year. market second We the approximately at XX% to

the As by HEPLISAV-B's revenue driven HEPLISAV-B's were for year-over-year. two or in In product These market grew performance XX% HEPLISAV-B exceeded second the pharmacy results integrated expectations. quarter again strong once in critical performance Ryan retail and segments, networks IDN. delivery stated, quarter, net quarterly

quarter increased seeing have IDN, in share strong market large from end of For to purchases second increases exceeded vaccination the appropriate hepatitis the vaccine to Recommendation, in at meaningful approximately that patients quarter, pre-pandemic last Universal conversion approximately we're XXXX segment, the In driving of end year. to HEPLISAV-B's that IDN adopt the and XX% started the compared at the B second customers their levels. XX%

adoption of working We Recommendation year. the the of Universal others second large are drive health these the systems with half to and during ongoing

continue we make the tremendous In pharmacy to retail progress. segment,

XX% dose year-over-year. the HEPLISAV-B volume increased During quarter,

the are one primary and market our growth We marketing growth retail will that market forward. adopting focus Recommendation. number result Universal customers this Driving is sales and about as be retail are excited moving the indicator pharmacy

patterns top our within leader in Although the remained we confident be of chains, several as our extremely year-over-year, are to the for critical segment. XX% market ability share market consistent this quarter retail buying at result a of

and and established segment. have collaborative across relationships well headquarters marketing chain the launched the We retail top strong have across initiatives key sponsored tactics

leaders sales drive the reach in Given district reach expanded to expansion. across and headquarters, this, optimizing retail segment be on divisional, regional force chain. to will This our sales our expand we the will market top promotional force call

plus to sales the of important sponsored full segment. impact strong reach also initiatives our our anticipate collaborative leadership growth sales we force initiatives, enable increasing the launched We see to the expanded second and this marketing of the addition end within market In continued these force at market excited are reach, will headquarters quarter.

of We we to our the Both said capabilities by B segments. two uptake. infrastructure, help XX% control, pharmacy have on these XXXX focusing growth as hepatitis see of required approximately institutional ACIP market compared efforts segment, expect the in anticipated the market universal most in Recommendation can to these are IDN retail and and the volume will Universal drive patient from segments that segments XX% represent approximately We've XXXX.

market capturing combined. of with these the segments segments approximately XX% share now in both to well-positioned are We HEPLISAV-B

had the reaffirming we market summary, outstanding in hepatitis vaccine that In the confidence an our quarter, HEPLISAV-B B leader market. becoming expanding

progress the our the pharmacy IDN. second in of Both We and momentum HEPLISAV-B and are exceeding key which quarter. significantly of expectations of retail performance encouraged segments the for contributed by to

revenue hepatitis pharmacists HEPLISAV-B commercial market made expansion and quarter's of our vaccine, B possible the patients B hepatitis for record This by reflects vaccine demand from best-in-class the execution. our results strong continued both physicians, and growing team's

our the take pipeline. I you will through clinical turn call to Rob over to now

Rob Janssen

Donn. you, Thank

plans progress to provide for quarter, on second pleased our recent our and XXXX. I'm the and our continued advancements important we execution throughout pipeline, Over made

of improved the These cell we concerns favorable the on in and tolerability results to team responses. and In program XXXX, development the antibody tolerability demonstrated with randomized, demonstrated I'll groups observed XX CDX+ evaluate vaccine Conference a aged T and presented with years. June, continued we safety In without and adults efficacy, this XX opportunity trial to develop the Vaccinology they of our XXXX in tolerability results Z-XXXX. from high showed healthy Z-XXXX. shingles at immunogenicity safety, to Z-XXXX Annual vaccine comparable All study, shingles support X that dose demonstrate active-controlled, Phase start Z-XXXX the Research. escalation adjuvant

the of FDA in assess we second half In XXXX. the a trial X/X with the pathway plan to early regulatory XXXX, Phase initiation support of the to

let's focused pertussis, turn a to intended robust vaccine. our in Tdap-XXXX immunization challenge model, Tdap. demonstrated responses. We CpG-XXXX Now improving booster recently or We're disease by completed against ThX primate pertussis novel durability and and the candidate on nonhuman vaccine Tdap program. the which adjuvant from for protection It's study in and booster an pertussis leveraging investigational tetanus our against diphtheria, protection active the

received human then. support primate our from and on Together, FDA the Tdap-XXXX primate pathways. clinical We study the non-human X proceeding B also challenge regulatory development as feedback and Type from Phase studies, a Pre-IND well FDA meeting human results recently feedback studies, from our as to

the We application FDA fourth quarter investigational new to the the To in of human challenge XXXX. initiation submit study. of support expect to an drug

by funded plan speed is Department fewer U.S with the candidate to a dose This action the development We're the vaccine Department of of up protection a that of a program. time evaluating safety alum tolerability activated Moving trial mechanism immunogenicity by three Phase This X doses CpG-XXXX. conducting with under with for two collaboration dose the XXXX and CpG entities vaccine to and the is Defense. of has compared on adjuvanted effective Defense. adjuvant to potential the

primate programs continuing of XXXX. contract completed July, through year. top challenge look XXXX. study, during modification agreement make these Department two We part a support rest a into In expected nonhuman [indiscernible] enrollment we of year, line this progress to the the to advancement executed data in the Earlier million with across totaling with $XX.X forward to this of Defense program Dynavax, in the from now

as establishment announce of our working external leaders Advisory our of look evaluation, in diseases. and to advisory internal board Board forward to excited renowned our in and pipeline, We development Scientific we're supporting addition, vaccine this infectious and In the opportunities. comprised research advancing as well with

over results. to our I'll now review call turn the to financial Kelly

Kelly MacDonald

I'll unless our financial on for Form the noted. you, our second to note information. and guidance report for are year. detailed for Rob. and press another release financial to period otherwise quarter Please Please I'm also full then that thrilled XX-Q the all review comparisons financial refer review results versus prior quarter. year key the the the strong updated Thank

HEPLISAV-B Starting $XX second million, compared revenue to quarter revenue driven with for XXXX second product HEPLISAV-B of net year, revenue. product by XX%. million, Total $XX by net last were of revenues grew quarter the of the

XX% confidence guidance about increase to represents to reflecting uptake the almost the and are to trajectory $XXX in $XXX to our million $XXX year the at midpoint, product million. We key million, full revenue HEPLISAV-B this market growth raising segments growth for our year. the prior the for including continued This continued in guidance therefore compared HEPLISAV-B product our million net excited are an at $XXX

funded pleased also to We average margin gross to trend continue we profile fully $X are compared in year. plague QX Department expect was the and mid margins vaccine representing for the by the to to about And in of U.S related with gross Other in in second the the for million year. XXs XX% Defense. the XX% HEPLISAV-B the quarter last revenue collaboration of approximately program for margins full continued revenue for with

compared marketing market efforts to the and personnel was The benefit we $XX period. to advancement market Selling, for turning disproportionately administrative for costs, our These pipeline segments key to driven by increase to million drive $XX prior will research prior the Now million by helplessly an quarter. for quarter drive $XX increase believe expenses driven upbeat. HEPLISAV-B and and expenses million, million to higher compared targeted periods. general the related continued The $XX development overall clinical share were increase expansion for in that was primarily and the in our in programs. increased

per of prior net QX, per diluted of to net basis Now $X.XX diluted or income, share we year $X income recorded turning net income $XXX -- the million basic share for in or per $X.XX compared to we GAAP GAAP period. $X.XX million share record at and

the year-end an second continue with the expect to a to our current quarter ended and $XXX finish with to year. marketable approximately balance million, plan, Moving with million. equivalents XXXX compared Based we securities cash cash operating sheet, our the positive free $XXX cash, of for balance we flow on to increase

portfolio for level to us markets. HEPLISAV-B our share without of continue to to and majority we vaccine drive this return business, to Additionally, capital in capital is capture sustainable growth the of R&D support a candidates our core enabling bring believe to sufficient to needing market

We update are full year to guidance also expectations. XXXX pleased our financial

$XXX million As we between are million. be $XXX raising HEPLISAV-B mentioned, net revenue our products and expectations to

SG&A R&D XXXX. million, We our million. come $XX of due timing in trials, expense this end do We the to between guidance $XX range R&D between expect $XXX later expenses well into of year to program, startup and operating million are Tdap $XXX clinical activities and as our expenses lower of at taking early and million place as maintaining the expense

further outperformance, proud by continued are quarter of and we another closing, marked progress. of our strengthening pipeline HEPLISAV-B position, In successful financial

our build in to allocate to continue our also thoughtful growth base We be accelerate business. we current beyond and capital extremely how

complement execution has growth look to position strong our organic and capital shareholders. to external us and identify about as for pursue our strive to deliver and with we long-term strategic Our value to commercial We're provided forward excited to deliver our date, continuing progress goals to our on opportunities XXXX. flexibility to we

Donn Casale

for everyone like of to Q&A call. would now attention the Operator, you, portion we Thank today's your today. open

Operator

[Operator first Thank the you. Phipps line with Instructions] from William comes Our of Blair. question Matthew

line now open. Your is

Matthew Phipps

afternoon. Good Yes.

Just to great maybe first share really I expected get you you congrats market would started slower retail market have for in of it little what quarter guys. is picking had expanding, be -- just given faster a see. up you around your I is? on of kind where guess even guess some the Is this Great the year that growth. a little you for a overall Donn, I as to a commentary expected? bit than little later. million. bit first to bit $XXX you Or And

Here's are that kind you $XXX to get where to think of million. in trajectory you

Ryan Spencer

for thanks question. Again, the Matt. Hey,

your growth, in as pleased accelerating uptake obviously in the answer both see comments, so and critical, We're growth the I really question, market to we Regarding segments, retail specifically than with But actually and market forecasted. so retail recommendation is is the more IDN. market both on the IDN. growth mentioned to

those something excited that's that segments. really so about And we're in

Matthew Phipps

control on arm Boostrix? as that include the Great. such Did Thanks. study nonhuman curious a study. challenge And Tdap

Ryan Spencer

did. It

Matthew Phipps

Did on meeting you plan of some that Or will any you at coming up? to do comment that? present

Kelly MacDonald

We which control T would any on strong strict to primate in meeting that X. adjuvant present But -- we cell arm don't be nonhuman to have plans own. data compared and saw comparatively its responses general,

pleased just on comparator. were before compared point with put And a just Donn's clear. then to we the question so you're to Matt, results So the finer Yes.

we As you mentioned, its projected. than accelerated faster

time at haven't changed guidance the point, around overall this peak. long-term the We on our

over So watch to to kind on we're chicken, curve of have See, this end. just and that a little if time. the evolve got steep to going front how see that accelerator the the continues

Matthew Phipps

Yep, congrats you and understood. again. all Thank

Ryan Spencer

much. so you Thank

Operator

Rodriguez-Dumont next comes with question the Thank Our you. [Operator Instructions] Cowen. Ernesto from line of

now line is Your open.

Ernesto Rodriguez-Dumont

Hi, on and congratulations question. quarter. taking Thank you my great for a

one So on HEPLISAV. question

You have guided previously for low gross margins in the XXs.

that we in looking that something margins improvement should is mid high on short-term? in the margins? Maybe reported XXs. Now you Is something gross more Or -- and consider that estimates forward? the

Ryan Spencer

Kelly, I one. think that

Kelly MacDonald

sure. For Hi, the for Ernie. question. Thanks

years know, in you couple lumpiness As and as of we've of facility made over in the seen sort last Germany. in investments pretty COG manufacturing over we've and meaningful the our

excited level question translating in see directly, margins quarter. So the especially would mid improve some yield we improvement here on really your continued the this this for we're in average. margins, of margin to that To answer on expect XX% with year to

Ernesto Rodriguez-Dumont

from computations? or led you that in And in Grade And in one helpful. the to got you also you of any you. have Grade presentation, that treatment? if on of disclose Thank presented, I terms -- the That's AES the particular, it. on X particular the X Got shingles feedback discontinuation vaccine were may that deposition

Ryan Spencer

do to Rob, one. you that answer want

Rob Janssen

in sorry, teen third-party we related to and led -- X would similar was discontinuation The was detainee the by be the to group, related be It it to we ones wasn't lead did. one lowest by vaccine not to sponsor from vaccine. to And Yes, related. consider there X the a it that was investigator, thought between two but Grade the were that groups. the

Ernesto Rodriguez-Dumont

it. Got

Okay. Congrats Appreciate it. Thank you. again.

Ryan Spencer

Thank you.

Operator

Roy Our Securities. Buchanan line Instructions] question JMP with the of Thank comes [Operator you. next from

line now Your open. is

Roy Buchanan

for the question. taking Thanks Great quarter. Hi.

new an I beyond -- grant. that the And much nonhuman that. original starting [indiscernible] like in it are of how in total what’s nonhuman left new challenge the I a the loss the to just as grant approval? you bit does on the guess the guess, as trial how have I probably just access far get then trial. challenge the you TR you says, the primate getting far Do primate But help think And was can us one, quite to then you? gives that part amount? the First you understand seems entire

Ryan Spencer

Roy, thank you.

recall, original $XX trial. X contract. That to was that contract the Phase full we the on about focus million, access will is If that of you the have to completion

the a I to get there's term real think, support So number studies. how human eventual in is challenge amendments leverage expanded non contract of does the $XX far is, total, that's non a longer that largest approval one study, a which by crux, that with real to primate of million the about primate the being human that to component get pathway question would piece us

the particular that's covered is which step contract this in expansion. first so And by process, that

Roy Buchanan

that leverageable if case U.S still license U.S for the Okay, great. have make to that, quick more candidate just Does probably most for shingles. base guess Then forego to trial? on talk to it curious, around have that the go to you but approval? I it's guys the market? sense latter after thoughts is that ex Is have might the and if a one U.S it next I Or know you the a you And to your FDA need I'm say will is out? assumption to case?

Ryan Spencer

market. current strategy our is Now, U.S include definitely to the

that that So U.S would have for opportunities the agency support in indicated, markets took sort to licensure. U.S talk efficacy for ex us as any of pathway you to But utilize anything still strategy to U.S. we'll to a plan a data the part to our the about of be

Roy Buchanan

Okay, you. thank

Operator

with Miller Evercore you. line Our from comes Instructions] [Operator ISI. Jon Thank next the of question

line Your is open. now

Jonathan Miller

for guess you a on congratulating join thanks quarter. in I'll my everybody so I taking question. great else guys, much Hey,

be this Appreciate every as can exciting I the As Thanks, the will new covering one. quarter analysts as that. assume only story, Jon.

Ryan Spencer

have drivers like biggest further signs since That's the maybe the IDN No, given front me. rack. the there their seeing segment from seen retail you're more versus as other will growing just my can pairs, say be and your from of retail or shared color what levers optimizing growth Are one growth sensitivity fastest maybe back are segments commercial and you've anything there a the to or that in ASAP for you any you be available segments that influencing rapid maybe price question. the may growth two that pushed little me When segments on efforts what give

Why we I'll take And the provide being, up? the within But in by and welcomed as second it's engagement, some vaccine this this really don't let important Donn optimization very the break little the around it's involvement as seen is vaccine good medicine quickly. pairs question it business, more to then retail. business. There's payer typically. insight relates generally general, or

or payer we So as from relates to recommendation any seen have a perspective. pricing not the pushback

don't, and the really the and the that for field So as on to I within marketing Donn. team acceptance. patient to it grow, -- ability operational recommendations impact and expect I the to we have But comes segment, don't to the down the it market retail over changes turn physician would any relates that sorry

Donn Casale

Yes. Hey, Jon.

the optimization relates establishing to time, B So quite quite force, we've the been optimizing relationships bit levels may I the which a for, not sales and for and regional of hepatitis that regarding so call, and of retail, through is where specifically will as the deploy the but be engaging divisional as on critical around be education, to only targets increase mainly recommendation us to mentioned, of pull the yes, to headquarters, which initiatives it some sales allows force, district retail identification also chains, at vaccine. these it is whatever initiatives, to marketing

levels. point that's retailer top is different process, the part have engage whole to And allow the us really recommendations sales forward change. So at to the of force this right attack drive throughout ensuring to we there those the

to makers more segment, gone allows the decision account at at structure pull clinic hospital drive top time vertical At the to a we've IDN well executives own level recommendation. within the same as the as to the the through segment,

at. So over able really And years the lot we've feel a we learnings launching FSFE. the upon based lot in a we're of it's about good where gather last of to been several

Jonathan Miller

big Maybe that that you going further end planning Tdap more sense. the of the makes that development have program. that on be That do on study how color it's support program, on and you're the starting year. challenge to of Great. will that by any How

Ryan Spencer

fits We then as haven't to that to just have be obviously, commented into larger on to it allow a studies. the product And we size can the is protective back endpoint yet. But picture, whole humans it'll as immunogenicity in in actual critical. that us demonstrating far -- the can use bridge how

study. this that likely So challenge a an It's study, to we initial larger is have and expected would do challenge

really this, as this important part before it's addition this recognize pertussis. development study a that vaccine with term to done longer to new is design of also been In one plan, hasn't a a

to So support now challenge and and progress disease his of working test to a we identify an we're humans. development allows in use can to model help efficacy a with where vaccine investigator

And so, One and on a number fronts. establish is to important pilot our the of Model for study also product, this

Jonathan Miller

Thanks Makes so sense. much.

Ryan Spencer

Definitely. question. you for Thank the

Operator

have closing Chief the remarks. Executive over we time. Mr. Spencer, no Ryan like Officer And would to you. hand to for conference questions at I back further this Thank

begin. may You

Ryan Spencer

Thank appreciate you, Dynavax. interest We today. and your us operator, for thank in you all joining

through you excited progress and products of We about value focus to We allows long-term infectious are Operator, look which the protect objectives us position, meaningful our the our we advancement continued forward of to call. to on world may progress. to drive end strength from believe help updating very our the executing our you on diseases.

Operator

call. conference for and Thank This us gentlemen, today. today's you you. Ladies thank joining concludes

wonderful disconnect. Everyone have You may day. now a

Dynavax Technologies (DVAX) 3 Aug 232023 Q2 Earnings call transcript